SIE Exam 4 Questions &
Answers(RATED A)
After a registered person resigns or is terminated from a member firm, the firm is
required to notify FINRA within: - ANSWER 30 Days.
U5.
An employee of a broker-dealer has just received a report created by her firm's research
department, but the report has not yet been released publicly. If the employee buys or
sells shares based on the research report, which statement is TRUE? - ANSWER The
employee has traded ahead of the report.
What type of investor is not a typical candidate for a variable annuity? - ANSWER A
senior investor.
Usually more appropriate for investors with long-term investment goals who don't
anticipate needing access to their money for at least 5-7 years.
Offering memorandum - ANSWER Used as the disclosure document for a private
placement.
Custodian account donors - ANSWER A donor may give gifts of cash and securities.
The record date for a company's cash dividend is Thursday, October 7. What is the
latest date a customer may purchase the stock for regular-way settlement in order to
receive this dividend? - ANSWER The ex-dividend date is the first day on which a stock
trades without its dividend. It is typically one business day prior to the record date,
which in this question, is Wednesday, October 6. For a buyer to receive the dividend,
the transaction must settle on or before the record date of Thursday, October 7. If a
person purchases the stock on or after the ex-dividend date, he is not entitled to the
dividend since regular-way settlement takes two business days and that would be after
the record date. For the customer in this question to be entitled to the cash dividend, the
latest date he may purchase the stock for regular-way settlement, must take place on
the business day before the ex-dividend date, which is Tuesday October 5. Note; If the
question does not state the type of settlement, assume regular-way.
To receive dividend - ANSWER The transaction must settle on, or before the record
date.
A Corporations shareholders must vote for: ? - ANSWER Stock splits.
The board of directors has control over DIVIDENDS, but must have shareholders
approval for STOCK SPLITS.
, What is the primary disclosure document for municipal bonds? - ANSWER Official
Statement.
MSRB cannot force a municipal issuer to create an OS, but if it is created, firms and
salespersons MUST distribute it to customers.
Stock that is undervalued in relation to its fundamentals? - ANSWER Value stock
A customer sells 500 shares of stock to a broker-dealer that makes a market in the
stock. The broker-dealer acted in a(n): - ANSWER A BD that always willing to buy
and/or sell shares of stock is considered a market maker.
Market makers will normally always act in a principal capacity and charge a customer a
markdown when buying the stock from the customer and a markup when selling the
stock to the customer.
CDSC is associated with which share class? - ANSWER Class B shares. BACK End.
Many annuity contracts also have contingent deferred sales charges. CDSCs must be
considered when a registered person recommends for a client to move assets from one
fund/contract to another.
Which of the following statements is NOT TRUE about a customer free credit balance at
a broker-dealer? - ANSWER AA customer free credit balance represents funds that a
customer can withdraw on demand.
BNotification of the free credit balance must be provided on each statement.
CThe notice must state if the funds are not segregated and may be used in the conduct
of the broker-dealer's business.
All of the statements are true except that notification must be at least semi-annually.
Actually, notification must be provided at least quarterly. If statements are sent more
frequently (i.e., monthly), then notice must be provided on each statement.
Discount Rate, Prime Rate, Fed Funds Rate, Call Rate - ANSWER Discount rate is the
rate that the Federal Reserve charges when it lends money to member banks. FED >
BANKS.
Prime rate is the rate that commercial banks charge their best corporate clients. BANK
> PRIME CLIENTS.
Fed funds rate is the rate charged for OVERNIGHT loans between member banks.
BANK > BANK.
Call rate is what commercial banks charge on loans to BDs for margin purposes.
Answers(RATED A)
After a registered person resigns or is terminated from a member firm, the firm is
required to notify FINRA within: - ANSWER 30 Days.
U5.
An employee of a broker-dealer has just received a report created by her firm's research
department, but the report has not yet been released publicly. If the employee buys or
sells shares based on the research report, which statement is TRUE? - ANSWER The
employee has traded ahead of the report.
What type of investor is not a typical candidate for a variable annuity? - ANSWER A
senior investor.
Usually more appropriate for investors with long-term investment goals who don't
anticipate needing access to their money for at least 5-7 years.
Offering memorandum - ANSWER Used as the disclosure document for a private
placement.
Custodian account donors - ANSWER A donor may give gifts of cash and securities.
The record date for a company's cash dividend is Thursday, October 7. What is the
latest date a customer may purchase the stock for regular-way settlement in order to
receive this dividend? - ANSWER The ex-dividend date is the first day on which a stock
trades without its dividend. It is typically one business day prior to the record date,
which in this question, is Wednesday, October 6. For a buyer to receive the dividend,
the transaction must settle on or before the record date of Thursday, October 7. If a
person purchases the stock on or after the ex-dividend date, he is not entitled to the
dividend since regular-way settlement takes two business days and that would be after
the record date. For the customer in this question to be entitled to the cash dividend, the
latest date he may purchase the stock for regular-way settlement, must take place on
the business day before the ex-dividend date, which is Tuesday October 5. Note; If the
question does not state the type of settlement, assume regular-way.
To receive dividend - ANSWER The transaction must settle on, or before the record
date.
A Corporations shareholders must vote for: ? - ANSWER Stock splits.
The board of directors has control over DIVIDENDS, but must have shareholders
approval for STOCK SPLITS.
, What is the primary disclosure document for municipal bonds? - ANSWER Official
Statement.
MSRB cannot force a municipal issuer to create an OS, but if it is created, firms and
salespersons MUST distribute it to customers.
Stock that is undervalued in relation to its fundamentals? - ANSWER Value stock
A customer sells 500 shares of stock to a broker-dealer that makes a market in the
stock. The broker-dealer acted in a(n): - ANSWER A BD that always willing to buy
and/or sell shares of stock is considered a market maker.
Market makers will normally always act in a principal capacity and charge a customer a
markdown when buying the stock from the customer and a markup when selling the
stock to the customer.
CDSC is associated with which share class? - ANSWER Class B shares. BACK End.
Many annuity contracts also have contingent deferred sales charges. CDSCs must be
considered when a registered person recommends for a client to move assets from one
fund/contract to another.
Which of the following statements is NOT TRUE about a customer free credit balance at
a broker-dealer? - ANSWER AA customer free credit balance represents funds that a
customer can withdraw on demand.
BNotification of the free credit balance must be provided on each statement.
CThe notice must state if the funds are not segregated and may be used in the conduct
of the broker-dealer's business.
All of the statements are true except that notification must be at least semi-annually.
Actually, notification must be provided at least quarterly. If statements are sent more
frequently (i.e., monthly), then notice must be provided on each statement.
Discount Rate, Prime Rate, Fed Funds Rate, Call Rate - ANSWER Discount rate is the
rate that the Federal Reserve charges when it lends money to member banks. FED >
BANKS.
Prime rate is the rate that commercial banks charge their best corporate clients. BANK
> PRIME CLIENTS.
Fed funds rate is the rate charged for OVERNIGHT loans between member banks.
BANK > BANK.
Call rate is what commercial banks charge on loans to BDs for margin purposes.
